Sime Darby plans for assets disposal worth RM5b

by SHAHEERA AZNAM SHAH / pic credit:

SIME Darby Bhd intends to dispose of assets in China’s Weifang Port and 3,518ha of Malaysia Vision Valley (MVV) land in Labu, Negri Sembilan, as part of its rationalisation of non-core assets.

Its group CEO Datuk Jeffri Salim Davidson said negotiations on the proposed disposals have taken place but have been delayed by the movement restriction imposition.

“We have non-core assets in the group, such as the Weifang Port in Shandong Province and the land in Labu which is quite valuable, that have garnered interest from some people for acquisition.

“We have been talking to them, but due to the lockdown, I do not know whether we can complete those deals and book profit for financial year 2022 (FY22). It is certainly difficult to say, but those are the assets we are looking at to be part of the non-core assets rationalisation exercise,” he said during the virtual media briefing yesterday.

Jeffri Salim added the return from the divestment of both assets, which are worth close to RM5 billion combined, will depend on the negotiations with the prospective buyers.

“The land alone is 8,800ha and worth a historic value according to our book, about RM2.5 billion while the Weifang Port is about RM1.7 billion.

“The land in Labu is part of the MVV project. It is unlikely people will buy 9,000 acres (3,642ha) of land at one go, it will probably be divested through by piecemeal,” he said.

Last March, Sime Darby disposed of its last block of shares in Eastern & Oriental Bhd for RM93.5 million or 60 sen per share, a decade after it bought into the property developer.

In 2020, the group divested its 30% stake in Tesco Stores (M) Sdn Bhd for RM300 million.

For its FY21, Sime Darby’s performance was lifted by its motor division due to strong demand for BMWs and super-luxury marques in all markets, especially in China.

Jeffri Salim believes the group could replicate the strong performance the group had during its previous financial year as many countries are still imposing travel restrictions.

Sime Darby is also banking on its industrial division to generate additional revenue leveraging on the anticipation of the infrastructure recovery.

Sime Darby’s net profit for its FY21 ended last June surged 73.78% to RM1.43 billion from RM820 million in FY20, achieved through the robust results from its motors division’s performance, mainly in China.

Revenue for the year rose 20.44% to RM44.48 billion from RM36.93 billion FY21. Its net profit for the fourth quarter ended June 30, 2021 (4Q21) was 19% higher year-on-year (YoY) at RM211 million on the back of an almost 29% YoY increase in revenue to RM11.34 billion.

The group declared a second interim dividend of eight sen per share and a special dividend of one sen per share for 4Q21, which brings the total dividend payout for the financial year to 15 sen a share, representing a payout of RM1.02 billion or more than 70% of its net profit.

Sime Darby shares rose one sen or 0.44% to RM2.26 yesterday, bringing its market capitalisation to RM15.37 billion.